Top Ten Pitfalls Of Life Insurance
- Date: 2008-07-04 - Word Count: 520
Share This!
Before you take out a life insurance policy, be aware of these potential gaps in coverage. By becoming aware of these possible loopholes, you will be able to choose your life insurance policy wisely.
1. Decreasing coverage.
There are policies where the face value decreases over the term of the life insurance. This works for some people, but make sure it works for you before you take it up.
2. Unsure coverage.
A life insurance policy has specific terms of coverage. For instance, beneficiaries of those who die by their own hands cannot claim death benefits. Read the specific claim conditions of your life insurance policy.
3. Inadequate coverage for disability.
Even if your policy gives you both life and disability coverage, check how much disability benefits you can claim and under what types of circumstances disability coverage can be enforced.
4. Inadequate face value.
You should buy an insurance policy that covers your family's needs for at least a year. It should be even greater if you think you'll have lots of debts that need paying.
5. No withdrawal option.
Some life insurance policies with a cash value component let you withdraw your money after a certain period of time. However, some insurance policies - especially those with a very low premium - will not return your money. All those years of payments will then be lost.
6. Depreciated value.
If you get the life insurance policy that has an investment component (your payments will be used to invest in high-yield accounts and a percentage of the proceeds will be returned to your policy), bad investment decisions by the insurance company can leave you with a depleted policy and face value.
7. No death benefits.
If you die and your beneficiaries begin claims procedures, insurance companies may still refuse to pay them if you omitted an important (even a trivial) piece of information from the insurance application form. They can refuse coverage on the grounds that you have not been entirely honest with the company.
8. Wrong beneficiary.
When you apply for your life insurance, you have to name your beneficiary. Make sure that the name of the beneficiary may be changed at some later date in case you change your mind or in case your beneficiary dies before you do.
9. Loss of benefits or severe depreciation for one unpaid premium.
What happens if you miss one premium payment? You should make sure that your beneficiaries will not lose your death benefits or that these benefits will not be significantly reduced after just one missed premium payment.
10. Not enough to retire on.
If your insurance agents assure you that your whole or permanent life insurance policy is a good investment, they may be trying to mislead you. The typical life insurance covers you in case of death. While the cash value equivalent of your policy may be withdrawn in full upon maturity or converted to an annuity plan, this still does not make a life insurance policy a good retirement plan. You get the most benefit from it after death, and you'd do better to get a different plan - one that has a higher rate of interest - you're your retirement.
1. Decreasing coverage.
There are policies where the face value decreases over the term of the life insurance. This works for some people, but make sure it works for you before you take it up.
2. Unsure coverage.
A life insurance policy has specific terms of coverage. For instance, beneficiaries of those who die by their own hands cannot claim death benefits. Read the specific claim conditions of your life insurance policy.
3. Inadequate coverage for disability.
Even if your policy gives you both life and disability coverage, check how much disability benefits you can claim and under what types of circumstances disability coverage can be enforced.
4. Inadequate face value.
You should buy an insurance policy that covers your family's needs for at least a year. It should be even greater if you think you'll have lots of debts that need paying.
5. No withdrawal option.
Some life insurance policies with a cash value component let you withdraw your money after a certain period of time. However, some insurance policies - especially those with a very low premium - will not return your money. All those years of payments will then be lost.
6. Depreciated value.
If you get the life insurance policy that has an investment component (your payments will be used to invest in high-yield accounts and a percentage of the proceeds will be returned to your policy), bad investment decisions by the insurance company can leave you with a depleted policy and face value.
7. No death benefits.
If you die and your beneficiaries begin claims procedures, insurance companies may still refuse to pay them if you omitted an important (even a trivial) piece of information from the insurance application form. They can refuse coverage on the grounds that you have not been entirely honest with the company.
8. Wrong beneficiary.
When you apply for your life insurance, you have to name your beneficiary. Make sure that the name of the beneficiary may be changed at some later date in case you change your mind or in case your beneficiary dies before you do.
9. Loss of benefits or severe depreciation for one unpaid premium.
What happens if you miss one premium payment? You should make sure that your beneficiaries will not lose your death benefits or that these benefits will not be significantly reduced after just one missed premium payment.
10. Not enough to retire on.
If your insurance agents assure you that your whole or permanent life insurance policy is a good investment, they may be trying to mislead you. The typical life insurance covers you in case of death. While the cash value equivalent of your policy may be withdrawn in full upon maturity or converted to an annuity plan, this still does not make a life insurance policy a good retirement plan. You get the most benefit from it after death, and you'd do better to get a different plan - one that has a higher rate of interest - you're your retirement.
Related Tags: insurance, life insurance, life insurance policy, life insurance policies
For more information on Life Insurance, please visit ezinsurance.com.au, a website that helps you compare prices, features, and financial strength of hundreds of life, trauma and income protection insurance policies in Australia! Get a FREE life insurance quote online and figure out your insurance costs quickly and easily. Your Article Search Directory : Find in Articles
Recent articles in this category:
- Motor Trade Rundown
It is not just cars that must be insured on British roads, every type of motor vehicle is required b - Claiming Compensation For Defective Products
Compensation claims for injury and damage caused by faulty, defective products normally target eithe - Ideas To Uncover Affordable Rate Auto Coverage
These days, everyone is looking for ways to lower expenses. Certain costs like home and car insuranc - Should It Be Illegal For People To Drive Without Vehicle Insurance?
There are many drivers on the road who drive un-roadworthy vehicles. The worst part is not that they - Do You Need Static Caravan Insurance?
Static caravan insurance is an automobile insurance that deals with vehicles that are used while on - Insurance - Tool For Personal Finance Planning
Financial planning is must for every individual. When we start saving money for our goals, there is - Family Life Insurance Policy For The Families Staying In Dubai
The main motive of insurance policy is to give financial security to the person's family especially - Buying Temporary Health Insurance In Florida
You are the resident of Florida? You are between jobs and therefore are not looking for a long term - Car Insurance Is Of The Utmost Importance In Today's Lifestyle
In today's hectic lifestyle we are always rushing to get from one place to another, whether it be ru - Health Insurance Companies Are Using New Laws As An Excuse To Raise Their Rates
Government officials are cautioning insurance companies to stop utilizing scare tactics to steam up
Most viewed articles in this category:
- International Health Insurance: Insure Yourself While in Go
We all will agree that whether we are living in our home country or abroad, our health needs constan - It's Never Too Early to Buy a Long Term Care Health Insurance!
Most people delay buying a long term care health insurance because they think that it is too early t - Home Owner Insurance Quote: Stay Safe!
Your house will not be fully secured until and unless you have a home owner insurance policy. A home - The Benefits of Health Insurance Are Immense!
Almost everyone in this world has fallen ill sometime or the other. Apart from illness, many people - What Happens When You Make An Insurance Claim?
If you've never filed a loss claim before, you might feel nervous and confused about the whole proce - Pet Health Care Insurance: Show your Pets That you Care!
Having a pet in one's household is a joyful experience. It can provide you with entertainment, compa - Three Ways to Buy Long Term Care Without Paying Premiums Out of your Pocket
Stop 100 people over 65 on the street and ask them if they will ever need to go to a nursing home an - Protect That Bauble: Engagement Ring Insurance
Engagement ring insurance can protect your bauble in case a worst case scenario happens...So you've - Do I Need Diamond Ring Insurance
If you have to ask whether or not you need diamond ring insurance you probably do. There's somethin - Choosing a Benefits TPA
The use of third-party administrators (TPAs) is one of the hottest trends in insurance today. Accor